The Federal Government yesterday invited bids for its $100 million smart grid pilot, Smart City, which the government hopes will inform it of the costs and benefits of the technology.

Announced in May as part of the 2009 Budget, the $100 million plan aims to reduce home energy bills and cut carbon pollution, using communications technologies to identify and resolve electrical faults and maintenance requirements, and allow consumers to manage their energy consumption.

Bidders for the work are expected to propose locations and an architecture for the trial, which the government hopes to garner lessons for an eventual wider deployment of the technology.

"This program is a good opportunity to test the costs and benefits of smart grid and smart meter applications before a wider regulated roll-out of smart meters in certain jurisdictions in coming years," said Energy Minister Martin Ferguson in a statement.

According to preliminary studies conducted by the Federal Government, smart grid technologies could deliver up to $5 billion in benefits annually, from improvements in the power industry, reduced greenhouse gases and improved power grid reliability.

As part of the announcement yesterday, Environment Minister Peter Garrett said, "Early estimates show that if smart grid applications are adopted around Australia they could deliver significant economic and environmental benefits to the Australian economy, including an estimated minimum reduction of 3.5 mega-tonnes of carbon emissions per annum."

Other nations are also adopting smart grid technologies, with the United States recently announcing a $4.5 billion smart grid plan.

Applications close 28 January 2010, with the successful consortium to be announced in April 2010. The project is expected to start in July 2010 and finish in June 2013.